Maybe the people who decide these things don't know much about history - in particular, football history. Back in 1970, Harold Wilson, then the Labour party's Prime Minister, chose to hold a snap general election on 18 June to capitalise on his party's popularity. The result was a foregone conclusion. Labour went into the election with a 12 percentage point lead in the opinion polls.
Then fate intervened. Four days earlier and over 5,000 miles away in Mexico, England's football team, surprisingly - and arguably unfairly - were booted out of the 1970 World Cup tournament when they lost to West Germany. In the national depression that immediately set in - at least in England - voters lashed out at the incumbent Labour government by kicking it out of office.
Fast forward to this summer and we have a near repeat of the juxtaposition. Three days before the likely referendum day, England's football team plays what may be a vital match in the 2016 Euro tournament in France. A typically drab performance by England's boys that sends the team crashing out of the competition could send the UK careering out of the EU. It doesn't help that nowadays England are footballing also-rans, whereas in 1970 the team was the defending world champions.
That the financial markets are gearing up for a bad result on 23 June is not much in doubt. Back in mid-November, sterling was at 1.43 against the euro, at the top of a trading range that had held throughout the year. Since then it has dropped through the bottom of that range and has fallen 9 per cent to €1.30, its lowest level for 13 months. Simultaneously, the pound has dropped almost 5 per cent against the US dollar and 7 per cent against the Swiss franc.
In that context, one sensible course for investors is to do what, in effect, the Bank of England is doing - put more wealth into foreign currencies. In the past year, foreign currencies held by the UK's central bank have risen 34 per cent to $98bn, their highest level on record. Who knows how much of that might be lost this summer in a futile attempt to defend sterling against a toxic reaction to a forthcoming Brexit? That doesn't really matter. What's important is that investors insure some of their wealth against the effects of an exit result.
The easiest way to do that is via exchange-traded funds. For mega bears of sterling, in the event of a 'no' vote there are products such as those from ETF Securities that lever the movements in one currency against another by a factor of five. For example, ETFS 5x Long USD Short GBP (USP5) and ETFS 5x Short GBP Long EUR (GBE5), roughly speaking, do what their titles suggest.
However, such products, whose returns are based on daily price changes, are hugely risky because they magnify the arithmetical fact that any given percentage fall from a base figure cannot be compensated by the same percentage rise. Readers who want more explanation should dig out Bearbull of 1 March 2013. But you will get the drift if I point out that, in the case of the GBE5 fund, if the euro falls 1 per cent against sterling on one day and rises 1 per cent the next day, overall the fund's value will have dropped 0.25 per cent (without any leverage the drop would be 0.01 per cent).
Personally, I would think it sufficient if portfolios are simply leavened by the addition of ETFs that offer ungeared exposure to the likes of the US dollar, the Swiss franc (the perennial safe-haven currency) and maybe even the euro (though that still faces grave risks of its own). Exposure to Norway's krone is more a play on the oil price than on the strength and stability of Norway's economy, and the Australian dollar is a bet on commodity prices. In the coming months, making such wagers may be successful, but that's not the point - successful or not, they don't obviously offer insurance against the risks of Brexit.
As to which equities in a portfolio should make way for safer currencies, that's a tougher call. It may be that truly global multi-nationals such as Unilever (ULVR) or Diageo (DGE) won't be much affected by Brexit, short of changing their country of domicile, which would not necessarily affect their London listing. However, as a rule of thumb, it may be fair to say that the more a company's activities focus on exporting to the EU or need a fair wind from EU legislation, the more it will suffer - if only through the years of uncertainty that an impending exit would bring.
That especially applies to the UK's most successful industry - financial services. Even those who cling to the illusion that somehow the UK will gain from being outside the EU can't contrive a plausible scenario that will make the UK's financial services industry better off, especially those bits closely connected to the City.
These are not happy thoughts. And all because England may lose a football match on 20 June.
